Fee Disclosures and Corporate Fund Actions

[pb5350]

I have a question regarding participant fee disclosures and corporate fund actions (i.e., actions taken by the fund issuer to rename, merge, or otherwise change one or more of their funds).  Historically, when the action affects the investment information provided in the notice, we have produced an updated fee disclosure and sent it to the plan sponsor with instructions to distribute to participants.  Corporate actions happen almost weekly, and some of our clients have complained about having to distribute updated fee disclosures multiple times throughout the year. 

 

Some advisors/service providers I’ve talked to have stated that it’s “not technically required” to provide an updated fee disclosure or other notification of a corporate fund action, but I can't seem to find any supporting guidance or analysis that excuses the plan sponsor from having to notify participants when the investment information in the disclosure changes due to a corporate action.

 

Can anyone point me to guidance or analysis on this issue and/or would you be willing to share the approach you take to assist plan sponsors with notifying participants of a corporate fund action that affects their plan? 

 

Thanks and Happy New Year!

[card]

As far as guidance, the DOL's regulations are fairly detailed regarding which changes require an additional notice, and when.

Section (c) requires additional notices for changes to certain general plan information (for example, identification of the plan's investment alternatives) and also changes to administrative and individual expenses.

Section (d), dealing with disclosure of investment-related information, does not mandate any interim notices as long as a website provides the required information.

Additional general guidance is also provided in Field Assistance Bulletin 2012-2R.